How to Manage Your Finances While in College
You are sitting with a letter announcing that your application has been accepted at on one of the top ranking colleges. You can’t help smiling ear to ear as you read the letter again and again, relishing the feeling of accomplishment and a rising elation which engulfs you. Your mind starts making all kinds of plans for the college life and you start anticipating problems as well as their solutions. You are confident, happy and raring to go. However, in all the excitement and euphoria, an important aspect of planning is usually forgotten. That aspect is: planning your finances.
Planning your finances and monetary resources is one of the most important aspects which will directly affect your college life. If you do not plan ahead as to how and where you will spend your money, you will end up spending where it is not required. So, in order to make good use of your money and financial resources, it’s very essential that you formulate a plan regarding your finances. Following are some important tips which will help you in devising a financial strategy to ensure that you don’t fall short of money when you need it.
1. Separate your ‘wants’ from your ‘needs’
The first thing to do is to make a list differentiating your wants from your needs. You can survive without your wants (an Xbox, a new Iphone etc.) but you cannot survive without your needs (food, clothes etc.). Once you differentiate between them, it will be very easy for you to understand and identify your priorities.
2. Determine your fixed and variable expenses
Once you have done with differentiating between wants and needs, it’s time to determine what will be your variable and fixed expenses. Variable expenses are those which may keep changing, i.e, clothes, books, medical expenses etc. These expenses can be reduced and controlled with careful planning. Fixed expenses are those which do not change and stay constant. i.e., rent, utility bills etc. Before preparing a budget, it’s essential that you determine both the types of expenses.
3. Prepare a budget
Now that you know what your needs and wants are, and have determined your fixed and variable expenses, it’s time to prepare a comprehensive budget. The budget should include all major and minor expenses. Always give preference to your needs and fixed expenses over your wants and variable expenses. The budget should also include even the minutest of expenses.
4. Prepare a tracker
No matter how good a budget you prepare, it’s useless unless you track your expenditures and check whether they are on par with your budget. The best way to track your expenses is to jot down all the details of money spent each day either in a notebook or on your smart-phone. Expense tracking apps can also be used.
5. Start earning
What goes out also needs to come in. Earning while studying does not only mean you will able to generate income, it will also give you a valuable experience and confidence. Earning will also boost your time managerial abilities. Apart from these benefits, you will have a constant flow of money every month. The continuity will help you in devising your expenses in a better way.
6. Spend less than you earn
There is an old saying: one must always stretch their legs only to the extent of their blanket. This applies here too. Make sure your expenses are more than your income, or you will be working to pay off your debts even after you are done with your studies.
7. Avoid debts
Despite all the student loans and schemes available, it is best if you finance your study on your own money. However, the expenses are usually so great that even if you work, you may not be able to cover all of them. If you must take student loan or such credits, make sure you don’t spend the money where it’s not needed. Treat it like a liability which you must take off your back as soon as possible. Debt is the destroyer of enthusiasm and opportunities. Never fall in debt.
8. Pay your bills as soon as possible
Another important thing to take into consideration is the avoidance of penalties and fines. Pay all your bills as soon as they are issued and never let them accumulate. It’s always easier to pay bills one at a time instead of paying all of them at once.
9. No vices
Do not get addicted to any vices. Often when young students start to live separately, they fall into addictions. Remember, addiction to any vice like drinking or smoking can destroy your whole career and may also prove fatal. Getting addicted to such vices is easy as it’s usually a ‘I-will-try-this-just-once’ mentality which ends up in a far sinister habit.
10. Protect your personal information
Protect your personal information like the social security number, bank account details etc. Avoid sharing aspects of your financial details with anyone unless you trust them.
11. Avoid impulsive purchases
If you think you need to buy something, do not do so on your first impulse. Write it on a sticky note and stick it somewhere you can see it every day. If, at the end of the week, you still think you need it then you may go ahead with purchasing it. This is a good way to filter those things which you may need but which can also wait.
12. Buy used books
When you buy books, buy used ones. Find out the bookstores or areas where used books are sold and visit them once. Buying used books will save a lot of money for you. The same goes with things like small furniture items etc.
13. Use public transport
If you need to commute around the city, always opt for public transport. Commuting through the public transport will not only save you huge amounts of money but will also ensure that you get good exercise as you will have to walk short distances to and from the transit stations.
14. Use student discounts and benefits
Student discounts exist for a reason. If you have them, don’t hesitate in using them as they will also save you money.
When you plan for your career and aspire for higher studies, if there is anything which may pull you down, it’s the lack of financial resources. But if you plan well in advance, you can overcome this obstacle very easily. The College life is such that the more you learn to save money in it; the more resourceful you will prove to be in your later life. Resourcefulness is a very rare and highly admirable trait. You can induce it in yourself by saving money and using it carefully in your college term.